Forex, Foreign Exchange

Why Trade the FOREX?

2008-08-24T19:21:00.000+07:00

My purpose for writing this article is to demonstrate to you the advantages of trading on the Forex market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote "If It Doesn't Go Up, Don't Buy It". He said "Everyone who invests is a trader, only the time period is different." It is a lesson that I took seriously after taking a beating in the stock market in 2000.

So now, let's compare features of currency trading to those of stock and commodity trading.

Liquidity — The Forex market is the most liquid financial market in the world around 1.9 trillion dollars traded everyday. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.

Trading Times — The Forex market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), allowing active traders to choose the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.

Leverage — Depending on your Forex account size, your leverage may be 100:1, although there are Forex brokers that offer leverage of up to 400:1 (not that I would ever recommend that kind of leverage). Leverage in the stock market can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. Because the commodity markets are not as liquid as the Forex market, its leverage is inherently riskier. Although I was never shut out of a commodity trade by the day limit, the fear was always in the back of my mind.

Trading costs — Transaction costs in the Forex market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up.

Minimum investment — You can open a Forex trading account for as little as $300.00. It took $5,000 for me to open my futures trading account.

Focus — 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely.

Trade execution — In the Forex market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent.

While all of these features make trading the Forex market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.

by Susan Walker

Online Currency Trading requires Patience

2008-08-17T21:26:00.000+07:00

When the going gets tough, the tough get going. This adage often brings back the memories of my past days when I was trading initially in the currency exchange market. Indeed, there's nothing more hurtful than losing your invested money in the FX market. But, online currency trading is like life where you're got to learn from your wrong moves and keep moving on. Learning the basic skills of online forex trading could be easy but, practically, one needs to acquire the advanced skills to play safe through thick and thin of FX trading.

I have traded in forex for many years and, if you count on me, I must tell you that the secret of successful trading lies largely on the hunch and intuition of an trader. Technically expressed, you should have the accurate forex alerts and forex signals to be able to make the right moves in the currency market. However, this is easier said than done as the skills of the Currency Trading Signal takes a long time to master. This is why while a few people are able to boost their forex pips in a short span of time, the others take a long time to achieve the same or maybe, some of them get frustrated and just give it up! The reality is that not many people are ready to be entirely devoted to the perilous process of online forex trading.

Having said this, I still wonder why some people choose to be a dare-devil and risk their money instead of simply following an established and renowned Account Forex Online Trading. I began trading in 1997 and there is one important thing I have learnt in my trading career so far, i.e., you have to got to be patient to learn the tricks of making right moves at the right times and profit from your trading.

Since I have led quite a successful career in forex trading, I have been sharing the tips and tricks of online currency trading with many traders around the world through my G7 Forex Trading System which as you know has remained pretty successful for many traders so far. My G7 Forex Trading System is an easy-to-follow, step-by-step trading manual offering in-depth online forex trading review.

If you visit my site (www.forex-science.com) you will find many of my existing customers are pretty satisfied with the performance of their investments and in fact, most of them have been able to increase their forex pips drastically. You would be surprised to know quite a few of them haven't traded for a long time! Now, this is what we call success in the forex trading, eh?

Floating And Fixed Exchange Rates

2007-03-22T09:52:00.000+07:00

Floating And Fixed Exchange Rates
February 6, 2003 | By Reem Heakal

Did you know that the foreign exchange market (also known as FX or forex) is the largest market in the world? In fact, over $1 trillion is traded in the currency markets on a daily basis. This article is certainly not a primer for currency trading, but it will help you understand exchange rates and why some fluctuate while others do not.
What Is an Exchange Rate?
An exchange rate is the rate at which one currency can be exchanged for another. In other words, it is the value of another country's currency compared to that of your own. If you are traveling to another country, you need to "buy" the local currency. Just like the price of any asset, the exchange rate is the price at which you can buy that currency. If you are traveling to Egypt, for example, and the exchange rate for USD 1.00 is EGP 5.50, this means that for every U.S. dollar, you can buy five and a half Egyptian pounds. Theoretically, identical assets should sell at the same price in different countries, because the exchange rate must maintain the inherent value of one currency against the other.
Fixed
There are two ways the price of a currency can be determined against another. A fixed, or pegged, rate is a rate the government (central bank) sets and maintains as the official exchange rate. A set price will be determined against a major world currency (usually the U.S. dollar, but also other major currencies such as the euro, the yen, or a basket of currencies). In order to maintain the local exchange rate, the central bank buys and sells its own currency on the foreign exchange market in return for the currency to which it is pegged.

If, for example, it is determined that the value of a single unit of local currency is equal to USD 3.00, the central bank will have to ensure that it can supply the market with those dollars. In order to maintain the rate, the central bank must keep a high level of foreign reserves. This is a reserved amount of foreign currency held by the central bank which it can use to release (or absorb) extra funds into (or out of) the market. This ensures an appropriate money supply, appropriate fluctuations in the market (inflation/deflation), and ultimately, the exchange rate. The central bank can also adjust the official exchange rate when necessary.

Floating
Unlike the fixed rate, a floating exchange rate is determined by the private market through supply and demand. A floating rate is often termed "self-correcting", as any differences in supply and demand will automatically be corrected in the market. Take a look at this simplified model: if demand for a currency is low, its value will decrease, thus making imported goods more expensive and thus stimulating demand for local goods and services. This in turn will generate more jobs, and hence an auto-correction would occur in the market. A floating exchange rate is constantly changing.

In reality, no currency is wholly fixed or floating. In a fixed regime, market pressures can also influence changes in the exchange rate. Sometimes, when a local currency does reflect its true value against its pegged currency, a "black market" which is more reflective of actual supply and demand may develop. A central bank will often then be forced to revalue or devalue the official rate so that the rate is in line with the unofficial one, thereby halting the activity of the black market.

In a floating regime, the central bank may also intervene when it is necessary to ensure stability and to avoid inflation; however, it is less often that the central bank of a floating regime will interfere.

The World Once Pegged
Between 1870 and 1914, there was a global fixed exchange rate. Currencies were linked to gold, meaning that the value of a local currency was fixed at a set exchange rate to gold ounces. This was known as the gold standard. This allowed for unrestricted capital mobility as well as global stability in currencies and trade; however, with the start of World War I, the gold standard was abandoned.

At the end of World War II, the conference at Bretton Woods, in an effort to generate global economic stability and increased volumes of global trade, established the basic rules and regulations governing international exchange. As such, an international monetary system, embodied in the International Monetary Fund (IMF), was established to promote foreign trade and to maintain the monetary stability of countries and therefore that of the global economy.

It was agreed that currencies would once again be fixed, or pegged, but this time to the U.S. dollar, which in turn was pegged to gold at USD 35/ounce. What this meant was that the value of a currency was directly linked with the value of the U.S. dollar. So if you needed to buy Japanese yen, the value of the yen would be expressed in U.S. dollars, whose value in turn was determined in the value of gold. If a country needed to readjust the value of its currency, it could approach the IMF to adjust the pegged value of its currency. The peg was maintained until 1971, when the U.S. dollar could no longer hold the value of the pegged rate of USD 35/ounce of gold.

From then on, major governments adopted a floating system, and all attempts to move back to a global peg were eventually abandoned in 1985. Since then, no major economies have gone back to a peg, and the use of gold as a peg has been completely abandoned.

Why Peg?
The reasons to peg a currency are linked to stability. Especially in today's developing nations, a country may decide to peg its currency to create a stable atmosphere for foreign investment. With a peg the investor will always know what his/her investment value is, and therefore will not have to worry about daily fluctuations. A pegged currency can also help to lower inflation rates and generate demand, which results from greater confidence in the stability of the currency.

Fixed regimes, however, can often lead to severe financial crises since a peg is difficult to maintain in the long run. This was seen in the Mexican (1995), Asian and Russian (1997) financial crises: an attempt to maintain a high value of the local currency to the peg resulted in the currencies eventually becoming overvalued. This meant that the governments could no longer meet the demands to convert the local currency into the foreign currency at the pegged rate. With speculation and panic, investors scrambled to get out their money and convert it into foreign currency before the local currency was devalued against the peg; foreign reserve supplies eventually became depleted. In Mexico's case, the government was forced to devalue the peso by 30%. In Thailand, the government eventually had to allow the currency to float, and by the end of 1997, the bhat had lost its value by 50% as the market's demand and supply readjusted the value of the local currency.

Countries with pegs are often associated with having unsophisticated capital markets and weak regulating institutions. The peg is therefore there to help create stability in such an environment. It takes a stronger system as well as a mature market to maintain a float. When a country is forced to devalue its currency, it is also required to proceed with some form of economic reform, like implementing greater transparency, in an effort to strengthen its financial institutions.

Some governments may choose to have a "floating," or "crawling" peg, whereby the government reassesses the value of the peg periodically and then changes the peg rate accordingly. Usually the change is devaluation, but one that is controlled so that market panic is avoided. This method is often used in the transition from a peg to a floating regime, and it allows the government to "save face" by not being forced to devalue in an uncontrollable crisis.

Although the peg has worked in creating global trade and monetary stability, it was used only at a time when all the major economies were a part of it. And while a floating regime is not without its flaws, it has proven to be a more efficient means of determining the long term value of a currency and creating equilibrium in the international market.

Six Forex Trading Tips for Newbies

2007-03-01T10:07:00.000+07:00

You have decided to be a trader in the forex market, and you have no idea on how to begin. Let's first start by defining what the forex market is and what it does.

The term "forex", also known as the foreign exchange is a market for the sale and purchase of all kinds of currencies. It originated in the early 1970's when floating currencies and free exchange rates were first introduced. At this time, the forex market traders were the ones who set the value of one type of currency against another.

Nowadays, the market forces determine the value of a currency against another. One unique aspect of the Forex market is that very little trading qualifications are required of anyone intending to trade therein.

Independence from external control ensures that only the market forces influence the currency prices. As the largest financial market, with trades reaching up to 1.5 trillion U.S. dollars, or USD, the money moves so fast, it’s impossible for a single investor to substantially affect the price of any major foreign currency.

In addition, unlike any stock that is rarely traded, forex traders are able to open and close any positions within seconds, because there are always a number of willing buyers and sellers.

1. The first thing you need to do is open a forex account. You will have to fill an application form which includes a margin agreement stating if the broker will be allowed to intervene with any trade when it appears too risky. Since most trades are done using the broker's money, it is only logical that he protect his interests. However, once you have established an account, you can fund it and begin trading in the forex market.

2. Adopt a trading strategy, that has proven to be successful for you. Remember that strategies will work differently for different traders, so don't try to adopt a strategy that works well for another trader. It might backfire on you. The two available approaches are either technical analysis or fundamental analysis. A combination of the two is a more preferred choice for experienced traders.

3.Understand that prices move by trends. Forex has a popular saying, “The trend is your friend.” There are certain movements that have been studied over many years in order to identify a pattern in the trend. These trends need to be understood in order to understand a good trading strategy. For small accounts that are $25,000 and under, trading with a trend may help improving your odds when compared to bi-directional trading. Most newbie’s will look to trade in any direction, when they should be trading with a trend.

4. Ensure you know which are the top five currencies pairs in the foreign exchange. These are USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD.

5. For newbies, it is advisable to maintain two accounts to ensure you learn to play the trading game. Keep one real account, one that you will actually use to trade real money; and the second account should be a demo, one that you can use to test alternative moves in the trading game. You can easily use your demo account to shadow the trades in your real account so you can widen your stops to see if you are being too conservative or not.

6. Always examine the one hour, four hour and daily charts that concern your trades. Although you can trade at 15 and 30 minute time intervals, doing so requires a handful of dexterity.

“Stop Hunting” - a Simple FOREX Strategy

2007-02-27T15:05:00.000+07:00

by: Mia Millis

Today FOREX world is built around large leverage and constant use of margin, in equities, standard margin is set at 2:1, in options, the leverage increases to 10:1, in the futures market, the leverage factor is increased to 20:1, but in the FOREX market the leverage sets the highest bar by increasing to 100:1 ratio and can climb up to 200:1 meaning that you can invest $100 for a $20,000 value control! An experienced trader would limit his leverage to no more than 10:1.

Alongside leverage usage, or as in many FOREX rookies’ cases using too much leverage, comes the opportunity for either extremely profitable or extraordinarily dangerous and huge loses. You can double your account overnight or lose it all in a matter of hours if you make use of the full margin at your disposal. Considering that fact, most FOREX traders use “stops” order / “stop-loss” - they simply do not have the luxury of nursing a losing trade for too long because their positions are highly leveraged, and here you can step in and take advantage of this knowledge.

Stop order in a nutshell is a form of insurance or security measure that is given to buy or sell when a currencies' price surpasses a particular point. Using stop loss is critical for long-term survival. By setting a predetermined entry or exit price, investors usually use this system to minimize their loses when off for the business day or any other situation in which they are unable to monitor their portfolio for an extended period.

The main FOREX strategy which takes advantage of this knowledge is “Stop Hunting” , which attempts to force some foreign currency exchange investors out of their positions by driving the price of a currency pair to a level where many investors have chosen to set their stop-loss orders (aka “weak longs”), by understanding that the human mind naturally seeks order, most stops are clustered around round numbers ending in "00" (i.e. if the EUR/USD pair was trading at 1.1380 and rising in value, most stops would reside within one or two points of the 1.1400 price point rather than, say, 1.1417). Absorbing that fact alone is priceless knowledge (the price of a currency pair can experience sharp moves when many stop losses are triggered); professional traders place their stops at less crowded and more unusual locations. The possibility of profit from these unique dynamics of the foreign currency market is huge and proven.

The Start Line Of The FOREX Tradeology

2007-02-24T17:22:00.000+07:00

by: Mia Millis

The foreign currency exchange market is available for people from all over the world. More and more people take their first steps in FOREX trading, contributing to its volume and making it viable and easy to use for the ordinary individual, in contrast to only a few years back when only pros, hedge funds, major banks and institutional traders used the FOREX market. The key explanation for this turn of events is the Internet which dramatically increased accessibility. Almost all firms are now offering, free or in return for signing-up, easy to operate software for online FOREX trading.

Traders’ essential goal in FOREX is to estimate which currency will increase in worth against a different currency, and so getting a hold of a method which helps you to foresee future movements can help you in gaining a nice fortune. Realizing the fact that you are always trading by a ratio between two currencies should clarify the cause for seeing these letters arrangements: EUR/USD, USD/JPY, and GBP/USD etc. The five most important and highly popular currencies are the US Dollar, Japanese Yen, British Pound, Euro and Swiss Franc.

The FOREX market is open 24 hours a day; major firms keep brokers working shifts uninterruptedly so people from all over the world can trade always. This is attributable to the fact that nowadays most trades are carried out through company brokers.

Fear not, you can rest well at nights and even enjoy a day off every once and a while without being logged-on the FOREX market 24/7. All you have to do is give your broker your “stop-loss” / “stop-orders” to buy or sell currency once they have reached a certain price, thus preventing major losses.

The FOREX is considered to be a solid market. Nothing like the stock market which is highly unstable, this market is friendly and easy to comprehend. Another plus is that it has high liquidity which grants you the prospects of getting your money in or out at any given time. Be careful though, even when the FOREX seems like a playground to you, please seek your broker or another pro-trader’s counsel before getting involved in this market unless you have a lot of money to spend that you don’t really need. The big boys of FOREX would not care too much about seeing you lose all your life savings.

A Synopsis Of What It Takes To Trade The Forex Market With Success!

2007-02-24T17:15:00.000+07:00

This is the first article of a series whose purpose is both educational and practical.And above all they aim to be interactive meaning that any comments suggestions or ideas are more than welcome.

Lets start from the basics.The first thing someone needs is very good education.And this requires a lot of thorough research as there are many sources but not all are worth the money for their services.So in this sense an online forex course could be a good idea along with some books.But here comes the first major problem.Which course and which books,which aspects to cover?The technical analysis issue?The maxim go with the trend?The candlesticks analysis?And which system to use and follow?There are thousands of them!So before we even begin a trader is confused.And confusion is a very bad enemy but it can be arranged.How it can be arranged?With some simple steps.Such as simplicity.The more you know the better chances you have to succeed trading forex and it all comes down to probabilities.

Education is a must to all trading aspects from stocks to futures to forex.But forex has two unique features.High liquidity and extremely high leverage.And although the liquidity is a very good feature high leverage is not.At least not until you know what you are doing.Here we focus again on education.Besides a participation in a forex course either online or not,an amount that will be put away as an investment for education is the first thing a trader must do.Some ideas are to focus on analyzing the current conditions of the market and to have a bias for a specific currency pair.A system such as following the trend could be the core of a trading strategy.And a demo account with many virtual trades as many as possible for a long period of time is the next step.

Now the most important part of the trading action is to make a plan,stick to it and apply very strict money management rules because if the capital is finished and it very easy this to happen then our trading career will finish within a few days,months or even hours.

Lets face the truth that trading is not easy.It is unfortunately far more easy for someone to lose all his account rather than make wild profits beyond each expectation.That is because emotions and psychology are very crucial for success.Some of the most important emotions are fear,uncertainty,euphoria and revenge.Revenge comes into play very very often as when someone loses an amount wants desperately to get it back and often the outcome is that more loses come simply because the trader is on the wrong side of the trend!

Discipline and patience are virtues that distinguish a good trader from a mediocre trader.Without specific goals and a written procedure a trader is like a cargo ship that has sailed without any destination.Someday the fuel will be exhausted and many dangers from the weather to the potential physical damages may happen.Risks exist all the time.The point is how to deal with them.

One of the most useful phrases is taken from the movie Forrest Gump.Life is like a box of chocolates,you never know what you gonna get!

It is true.Be as prepared as possible.Do not let the brokers excite you promising very high returns and extremely high leverage.Do some very thorough research before opening an account funded with real money.Compare the bid-ask spreads and technical support to name only a few aspects.

Be very skeptical to previous results as offered from many signal services.The major aim should be to learn to trade and make your own decisions and not blindly follow some others decisions and opinions. Confidense and experience come with the passage of time.

So we mentioned simplicity before.Being realistic and having a controlled life balance is very important.One major goal should be consistency so as to have the ability to make profits each month and keep them.

Fundamental news are another important issue and in essence the technical analysis is the mirror of fundamentals.Expectations change rapidly and emotions also.And if you think about it emotions and expectations mainly move the forex market.Most times like the recent Fed rate hike decision a move is under way but the danger is when it will be finished and certainly not getting in at the wrong time after all the move is completed.

The best approach for a trader would be to set specific goals and if achieved then stop trading.The worst idea is to trade in a choppy market where random noise will make it difficult to get specific profits.

So a tested system with very precise rules such as entering exiting and having stop-loss orders may not be a holly grail but is surely one very good approach to start with and focus on it.Pivot points are such a system.At least it is a good start.They encompass education,discipline,strict criteria,targets and are a proven system that major players use.They are not foolproof always as nothing is certain but they deal with high probabilities and this is very important.

Also a very practical way is to act as organizes as possible.Meaning that :

1.Develop your own trading journal where you will be writing down your trades and a brief explanation of what made you place a particular trade so as to evaluate performance.Note each day the major economic releases if any because it is often wise to be out of the market before the release of the news and trade only after having a much clearer opinion of what price action may be.Remember it is all about high probabilities.

2.A risk/reward ratio of 1:2 meaning that you risk an amount to get at least the twice if all go well is suggested but sometimes it is best to be conservative and even apply an 1:1 ratio by applying very strict risk management risking no more than 2-3% of total capital per trade.Survival is everything.

3.It would be a good idea from time to time to have breaks from trading.Opportunities exist always so stopping trading when losses of 10-20% maximum of trading capital have accumulated is a good way to revaluate what is going on before a large amount of capital is lost.Trading is not gambling it is a way of investment.The philosophy should be to define realistic goals such as a number of pips per day and if achieved then stop trading.Greed is another bad enemy of traders.On the contrary the notion of compounding profits and retiring a portion of them each month is a good way to build a solid account and keep monitoring its growth.

So in this first article we touched briefly many ideas from education to psychology to a proven trading system etc.Each idea will have more in depth analysis in the very near future.Your comments and suggestions will help us a lot to focus on what you need or want to analyze.Above all interactive communication brings the best results.

Trading Techniques

2007-02-21T09:41:00.000+07:00

an your trade and trade your plan: You must have a trading plan to succeed. A trading plan should consist of a position, why you enter, stop loss point, profit taking level, plus a sound money management strategy. A good plan will remove all the emotions from your trades.

The trend is your friend: Do not buck the trend. When the market is bullish, go long. On the reverse, if the market is bearish, you short. Never go against the trend.

Focus on capital preservation: This is the most important step that you must take when you deal with your trading capital. You main goal is to preserve the capital. Do not trade more than 10% of your deposit in a single trade. For example, if your total deposit is $10,000, every trade should limit to $1000. If you don't do this, you'll be out of the market very soon.

Know when to cut loss: If a trade goes against you, sell it and let go. Do not hold on to a bad trade hoping that the price will go up. Most likely, you end up losing more money. Before you enter a trade, decide your stop loss price, a price where you must sell when the trade turns sour. It depends on your risk profile as of how much you should set for the stop loss.

Take profit when the trade is good: Before entering a trade, decide how much profit you are willing to take. When a trade turns out to be good, take the profit. You can take profit all at one go, or take profit in stages. When you've recovered your trading cost, you have nothing to lose. Sit tight and watch the profit run.

Be emotionless: Two biggest emotions in trading: greed and fear. Do not let greed and fear influence your trade. Trading is a mechanical process and it's not for the emotional ones. As Dr. Alexander Elder said in his book "Trading For A Living", if you sit in front of a successful trader and observe how he trades, you might not be able to tell whether he is making or losing money. That's how emotionally stable a successful trader is.

Keep a trading journal: When you buy a currency or stock, write down the reasons why you buy, and your feelings at that time. You do the same when you sell. Analyze and write down the mistakes you've made, as well as things that you've done right. By referring to your trading journal, you learn from your past mistakes. Improve on your mistakes, keep learning and keep improving.

When in doubt, stay out: When you have doubt and not sure where the market or stock is going, stay on the sideline. Sometimes, doing nothing is the best thing to do.

Do not overtrade: Ideally you should have 3-5 positions at a time. No more than that. If you have too many positions, you tend to be out of control and make emotional decisions when there is a change in market. Do not trade for the sake of trading.

Article From News week

2006-11-15T17:02:00.000+07:00

Forex trading is conducted in the foreign exchange market, otherwise referred to as the forex or FX market. This is the largest financial market in the world, with an estimated daily average turnover well in excess of US$1 trillion. A foreign exchange rate is the relationship between two currencies, which means the amount of one currency that would be required to buy (or sell) one unit of another currency. Currencies are quoted in pairs, e.g. Euro/US$ = EUR/USD, US$/Japanese Yen = USD/JPY, etc. Forex trading involves a foreign exchange transaction, defined as the simultaneous buying of one currency and selling of another currency. The foreign exchange market entered a new phase in 1971 when the Bretton Woods accord, which was characterized by fixed forex trading rates, was abandoned. This led to a new forex trading system of floating rates and opened a new world in foreign exchange. Forex trading is said to be a 24-hour, 5 day a week market, starting each day in Wellington, NZ and then moving around the globe as the business day commeneces in the next financial center. This rotation includes Tokyo, London, and New York. This allows foreign exchange market participants to react to news, whether it be economic political or social, 24 hours per day. Unlike other markets, such as stocks or futures, forex trading does not involve a central exchange and is considered to be an over the counter market known as the interbank market. Most forex transactions are conducted between two counterparties via the telephone or over an electronic network, such as the internet. Forex trading, once the province of commercial, investment and central banks has evolved over the years as other players took on a greater role in foreign exchange. This has seen forex trading evolve as multi-national companies, hedge funds, fund managers, individual speculators and private investors took on a greater influence. The evolution of the internet has further opened forex trading to the independent currency trader who can follow the market on a 24-hour basis and trade foreign exchange online. Factors that have attracted the retail currency traders to forex trading include the ability to trade 24 hours, 5 days per week, a high level of foreign exchange market liquidity, the ability to benefit in both bull and bear markets, narrow bid-offered spreads by historical standards, low margin requirements and general market volatility. On the other hand, anyone considering forex trading should first carefully evaluate the risks beforehand. Jay Meisler, a partner in Global-View.com, says one problem of trading with too-high leverage is that one piece of surprise news can wipe out one's capital. "Those who treat forex trading as if they were in a casino will see the same long-term results as when they go to Las Vegas," he says, adding: "If you treat forex trading like a business, including proper money management, you have a better chance of success."

An article from :
Newsweek International

Forex For Beginner 1

2006-10-31T11:54:00.000+07:00

Forex-Trader's Top Picks for Getting Started Forex Trading
Forex-Trader's Top Picks for
Getting Started Forex Trading (FROM : FOREX-TRADER)

This an outline of the minimum requirements necessary to operate your 'trading station'. If your needs extend to viewing multiple monitors, surfing the net simultaneously etc. additional requirements would be needed.

Windows 2000, XP, ME (or more recent)
Microsoft Internet Explorer 5.5 (or more recent)
Pentium III or IV (or equivalence)
256 MB RAM or greater
20 MB of free disk space
Back-up Device (Zip, Tape, CD-WR, etc.)
Cable Modem, DSL, ISDN, T1 or T3 Highspeed Internet Connection
An Internet Service Provider (ISP)
Printer

1. Read as many books on the subject of Forex Trading as you can. A good beginning (or a good refresher) would be either of Cornelius Luca's Books: "Trading in the Global Currency Markets", or "Technical Analysis in the Foreign Currency Market" with CD-ROM. If you are a rank and file beginner you may want to begin with the basics, "An Introduction to Foreign Currency Exchange Markets". Many of these books are expensive -- just consider it tuition and never consider shortchanging yourself in receiving the full value of your ongoing trader education. This education from experts is invaluable. Determine from the start that you, like successful traders (and all successful people) will have an extensive, constantly updated and growing library.

2. Choose your learning style and make arrangements to receive the best you can afford in quality Forex training:

a) Online Training
b) CD-Rom Training Courses
(especially when combined with Live Professional Trading Session Chatrooms)
c) Seminar Group Training
d) One on One Mentoring (in your home/office)

We have learned trading using all the above learning methods, and have found value in each. While books are essential for foundation building, online training and similar CD-ROM courses are useful for mastering the basics in an applied way . Seminar group interaction was useful for clearing away obstacles and developing hands-on trading skill. The ultimate experience for us was one-on-one mentoring over a two+ day period in our own home/office, at our own computers. Being Mentored can provide a quantum leap for mastering consistently profitable trading (and for only slightly more than group seminars). Expect to pay $1,000 up for online training up to $5,000 or more for one-on-one mentoring. It is reasonable to set expectations and goals to recover this cost (potentially many times over) in the first months of dedicated trading.

3. Subscribe to a Charting Software system, while you are reading and training so that you can clearly understand the market activity as it relates to what you are learning. Our example below illustrates live-data candlestick charting software with technical analysis indicators.Charting is an up-to-the-minute snapshot of foreign exchange activity that is indispensable for seeing the movements of currencies and determining buy and sell transactions. You can get a free trial 2 week (or more) charting subscription. Professional Charting Subscriptions offer many more tools and advantages than the free charting software that Clearinghouses often offer as an incentive to encourage new traders. Professional charting is an ongoing 'cost of doing business', plan to pay $100 to $250 / month for independent charting service. Discounts are sometimes available through training companies or brokerage houses.

4. Obtain a Trading Platform with Free Demo Account from a Clearinghouse/Brokerage firm (one you expect to continue on with. After you have learned platform trading skills you fund your trading account with real money). The 'Free Demo' is the actual trading platform (also called a trade station). It is a live-data-feed, real-time professional trading platform, provided to you so you can learn how to perform actual foreign currency trades (based on information you discern from your charting software, trading advisories etc.). On this Trading Platform, you make actual buy/sells (trades) with your $50K demo (play money) account.
This free Trading Platform, attached to a demo play-money account, is intended to introduce you to forex trading in an authentic way. It will usually expire in 30 days unless you opt to fund a (real money) account before that time. If you would like to maintain a demo account to continue to practice on while you concurrently go 'live' with your real-money account, your clearinghouse will likely oblige your request. Since a Clearinghouse typically makes a small profit on each buy or sell transaction (the spread) be wary of any no upfront costs to open an account to begin forex self-trading, and no commissions should be charged. The trick is to find a Brokerage with 'tight' spreads but also other features advantageous to a trader. Other than the spread, which is automatically deducted with each trade, there should be no operating costs associated with using any particular Brokerage's trading platform.

5. Provide yourself with the best Forex Advisory subscriptions that you can afford. Daily forecasts based on technical analysis and other indicators of forex market activity are an incalcuable advantage to predicting market moves. Plan on paying $75.00 up for a good subscription. This will provide a good cross-reference for the buy/sell indicators you are learning to identify. Also, make it habit to check CNN.com to keep your finger on the pulse of world events that are fundamental indicators in themselves.

6. As time goes on you may want to play with some of the interesting specialty forecasting software out there. It is continually being developed, as traders search for trade-fail-proof artificial intelligence forecasting. We are in the habit of reviewing and test-driving them as they debut. If one shows up that we have a good experience with you can find it here.

7. Practice, practice, practice. Begin by consistently achieving 4 positive 4-pip demo-trades per day. Imagine that your first serious goal will be to accomplish 50 positive trades in a row. On the day that happens, keep the printout of that historical event, because in the forex industry it is at that point you are considered to have 'what is takes' to begin to become a Forex Trading Mentor yourself -- if you so choose. Mentors, as you might suspect, are very much in demand in this time of rapidly expanding interest in self-trading. Mentoring could represent a satisfying and lucrative extra income stream for you, but, equally as important, mentoring has shown itself to be very instrumental in a trader's personal ongoing development --we learn best what we teach.

We love to see the milestone print-outs of 50-in-a-row traders, and welcome receiving them by fax at: 1-928-447-2978. There is a Hall of Fame being started for these achievers if you are interested. It is worth knowing that this kind of authentically documented trading record can also be a helpful third-party validation for those traders wishing to expand into the role of a Professional Trader trading funds for their clientele, either as an independent trader or a corporate trader.

Buying and Selling

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In the forex market, currencies are always priced and traded in pairs. You
simultaneously buy one currency and sell another, but you can determine
which pair of currencies you wish to trade. For example, if you believe
the value of the euro is going to increase vis-á-vis the U.S. Dollar,
then you would go long on EUR/USD instrument (currency pair).
Obviously, the objective of forex currency trading is to exchange one
currency for another in the expectation that the market rate or price
will change so that the currency you bought has increased its value
relative to the one you sold. If you have bought a currency and the
price appreciates in value, then you must sell the currency back in
order to lock in the profit. An open trade or position is one in which
a trader has either bought / sold one currency pair and has not sold /
bought back the equivalent amount to effectively close the position.

Market Conventions
Market
conventions are rules and standards imposed by a governing body. In
case of decentralized forex market these conventions might differ due
to many national regulators (FSA, FSC, CFTC, NFA, BCSC, etc.). Since
there is no central governing body that sets forex market rules and
standards, we will reference only these that are universal.

Quoting Conventions
The
first currency in the pair is referred to as the base currency, and the
second currency is the counter or quote currency. The U.S Dollar is
usually the base currency for quotes, and includes USD/JPY, USD/CHF,
and USD/CAD. The exceptions are the Euro (EUR), Great Britain Pound
(GBP), and Australian Dollar (AUD). As with all financial products,
forex quotes include a "bid" and "ask", which is more often called
"offer" in the forex market. The bid is the price at which a forex
market maker is willing to buy (and you can sell) the base currency in
exchange for the counter currency. The offer is the price at which a
forex market maker will sell (and you can buy) the base currency in
exchange for the counter currency. The difference between the bid and
the offer price is referred to as the spread.

Fundamental VS Technical analysis

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Currency traders make decisions using both technical factors and economic fundamentals. technical traders use charts, trend lines, support and resistance levels, and numerous patterns and mathematical analyses to identify trading opportunities, where as fundamentalists predict price movements by interpreting a wide variety of economic information, including news, government-issued indicators and reports, and even rumor.
The most dramatic price movements however, occur when unexpected events happen. the event can range from a central bank raising domestic interest rates to the outcome of a political election or even an act of war. nonetheless, more often it is the expectations surrounding an event that drives the market rather than the event it self.

Factors Affecting The market

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Currency prices are affected by a variety of economic and political conditions most importantly interest rates, inflation and political stability. moreover, government sometimes participate in the forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. this is known as central bank intervention. any of these factors, as well as large market orders, can cause high volatility in currency prices. however, the sizes and volume of the forex market makes it impossible for any one entity to "drive" the market for any length of time.

how it works

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Foreign exchange is the simultaneous buying of one currency and selling of another. the world's currencies are on a floating exchange rate and are always traded in pairs, for example euro/dollar or dollar/yen. in trading parlence, a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. A short position is one in which the trader sells a currency in anticipation that it will depreciate. in every open position, an investors is long in one currency and shorts the other. FX traders express a position in terms of the first currency in the pair. for example, someone who has bought dollars and sold yen (usd/jpy) at 104.37 is considered to be long us dollars and short yen.
the most often traded or "liquid" currencies are those of countries with stable governments, respected central banks, and low inflation. today, over 85% of all daily transactions involve trading of the major currencies, including the us dollar, japanese yen, euro, british pound, swiss franc, canadian dollar and australian dollar. the FX markets is considered an over the counter (OTC) or 'interbank' market, due to the fact that transaction are conducted between two counterparts over the telephone or via an electronic network. trading is not centralized on an exchange, as with the stock and futures markets. A true 24 hour market, forex trading begins each day in sydney, and moves around the globes as the bussinies day begins in each financial center, first to tokyo, london, and new york. unlike any other financial market, investors can respond to currency fluctations caused by economics, social and political events at the time the occur day or night.

Forex Market2

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there are three main reason to participate in the FX market.
one is to facilitate an actual transaction, whereby international corporations convert profit made in foreign currencies into their domestic currency. corporate treasurers and money managers also enter the FX market in order to hedge against unwanted exposure to future price movements in the currency market. the third and more popular reason is speculation for profit. in fact, today it is estimated that less than 5% of all trading on the FX market is actually facilitating a true commercial transaction.

Forex Market

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the foreign exchange market, also referred to as the "forex" or "FX" market, is the largest financial market in the world, with a dailly average turnover of approximately US$1.5 trillion. in comparison, the daily volume of the new york stock exchange is approximately US$30 billion per day.
until now, professional traders from major international commercial and investment banks have dominated the FX market. Other market participants range from large multinational corporations, global money managers, registered dealers, international money brokers, and futures and options traders to private speculators.

Marketiva 2

2006-10-15T12:22:00.000+07:00

Provides spot forex on major currency pairs and crosses; $5 cash rewards you can start trading right away; tight spreads from 3 pips; trading on 1% margin; virtual and live desk within one account; latest news, alert on market, events, signals, no market commisions; zero-interest on open positions, 24 hours support chat channel. the most sophisticated and easy to use forex charting tool; ability to trade from the charts and the best forex trading software available!

2006-10-15T12:14:00.000+07:00

Marketiva Online Forex Trading.

what is marketiva?

marketiva is a market maker for instrument traded on the over the counter foreign exchange (forex) markets. through marketiva, you can buy or sell instrument like EUR/USD, GBP/JPY, and others. marketiva also provides services like discussion channel, latest forex news, trading signals and alerts, charting services and many more.